Inside the Market's roundup of some of today's key analyst actions. This post will be updated with more analyst commentary during the trading day.
The surprisingly strong performance in the third quarter at Canada's biggest banks has analysts raising their price targets this morning.
Canada's Big Six banks all beat Street expectations for their bottom line as they reported results this week. Royal Bank of Canada, Toronto-Dominion Bank and Canadian Imperial Bank of Commerce all reported their latest financials on Thursday.
Despite weak capital markets, Royal Bank saw robust operating profit growth and pleased investors by announcing a four-cent dividend increase.
Desjardins Securities analyst Michael Goldberg raised his price target on the stock to $75 (Canadian) from $71.50 as he reiterated his "buy" rating. BMO Nesbitt Burns analyst John Reucassel raised his price target to $68 from $66 and reiterated a "market perform" rating. CIBC World Markets analyst Robert Sedran raised his target to $72 from $70.
"Royal's robust results, despite weak capital markets, contradict assertions that it is not as well diversified as other banks," said Mr. Goldberg. "Add to this good credit quality and strong capital, and Royal had the confidence to increase its dividend by four cents, much more than expected. We believe that Royal's strong Canadian banking, wealth and capital markets businesses support its premium valuation."
But Mr. Goldberg's favourite is actually Toronto-Dominion Bank. He maintained a "top pick" rating on the stock as he raised his price target to $107.50 from $100. "TD has been opportunistic in terms of growing, enriching its business and optimizing its capital. Its U.S. growth is a prime example. But acquisitions of Chrysler Financial, MBNA Canada and Target's U.S. card portfolio have blended well with TD's strong deposit base," he said.
BMO Nesbitt Burns's Mr. Reucassel also raised his price target on TD, nudging it up by $10 to $100. "We continue to rate TD shares outperform based on above-average dividend growth (10-15 per cent) as it expands the payout ratio, strong operating platforms in both the U.S. and Canada (as evidenced by good organic loan growth), good momentum in TD's wealth operations, and valuation," Mr. Reucassel said.
RBC Dominion Securities analyst Andre-Philippe Hardy also raised his price target on TD, to $104 from $93. "We believe that TD's stock is attractive as the bank should have above-average EPS growth in 2014 and 2015," he said. CIBC World Markets's Mr. Sedran raised his target on TD to $95 from $91.
Mr. Reucassel also raised his price target on Canadian Imperial Bank of Commerce, to $90 from $87. "CIBC shares remain outperform rated, reflecting good execution on (mortgages division) FirstLine, commitment to return capital to shareholders, and somewhat more clarity on Aeroplan," he said. "While there is no certainty that CIBC/TD/Aimia can conclude a three-way transaction, we believe that it is in everyone's best interest to do so. As such, we remain optimistic that a deal will get done in the near term."
Other analyst actions today include:
Stifel Nicolaus raised its price target on Facebook Inc. to $50 (U.S.) from $38.01 and reiterated a "buy" rating.
RBC Dominion Securities upgraded Apache Corp. to "outperform" from "sector perform" and raised its price target to $99 (U.S.) from $93.
JPMorgan downgraded Staples Inc. to "neutral" from "overweight" and cut its price target to $15 (U.S.) from $17.
For more analyst actions, breaking investing news and analysis, follow Darcy Keith on Twitter at @eyeonequities